BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION
IN THE MATTER OF THE COMMISSION'S )
INVESTIGATION OF THE RATES FOR )
ELECTRIC SERVICE OF PUBLIC SERVICE )
COMPANY OF NEW MEXICO, )
)
PUBLIC SERVICE COMPANY OF NEW ) Case No. 2761
MEXICO, )
)
Respondent. )
)
)
)
- -------------------------------------------------------------------
STIPULATION
-----------
The signatories to this Stipulation, as indicated on the signature
page, are collectively referred to herein as the "signatories." The signatories
have jointly prepared and submit this Stipulation to the New Mexico Public
Regulation Commission ("Commission" or "PRC") for approval in this case:
BACKGROUND
----------
1. In its Final Order in NMPUC Case No. 2752 issued on February 13,
1997, the New Mexico Public Utility Commission ("PUC") ordered Public Service
Company of New Mexico ("PNM") to file an electric general rate case using a test
period of the 12 months ending December 31, 1996.
2. In accordance with subsequent PUC orders, on November 3, 1997, PNM
filed its Advice Notice No. 258 and its petition for all approvals,
authorizations and variances necessary for PNM to implement 13 proposed revised
rates and 14 proposed new rates and to cancel 3 current rates. PNM also filed
its Experimental Incremental Interruptible Power Rate ("EIIPR") Final Report.
3. Subsequently, the Commission suspended PNM's proposed rates and
appointed Peter E. Springer as Hearing Examiner to preside over hearings in this
case.
4. After an evidentiary hearing and submission of post-hearing briefs,
the PUC issued its Final Order on November 30, 1998, from which PNM took an
appeal to the New Mexico Supreme Court in Docket No. 25,513. On March 15, 1999,
the Court issued its Decision, vacating and annulling the PUC's Final Order and,
thereafter, the Court remanded Case No. 2761 to the PRC "for further proceedings
consistent and in conformity with the decision of this Court and with the
opinion issued in Cause No. 25,523, State ex rel. Sandel v. PUC."
5. The PRC entered its Order Establishing Procedures on Remand on April
20, 1999, finding that this matter should be brought to final resolution as
expeditiously as possible and that the signatories should be allowed the
opportunity to reach a negotiated settlement in order to expedite final
resolution.
6. By entering into this Stipulation the signatories intend to serve
the public interest by bringing this case to final resolution as expeditiously
as possible, providing immediate implementation of lower rates and tariffs for
all PNM customer classes, rate stability for PNM's customers and revenue
stability for PNM.
NOW THEREFORE, in consideration of their mutual promises and of the
benefits they and their respective constituencies will receive, the signatories,
through their undersigned authorized representatives, stipulate and agree as
follows:
2
RATE REDUCTION
--------------
7. PNM shall file new tariffs which shall reduce its New Mexico
jurisdictional 1996 test period annualized revenues of $504,903,847 filed in
Case No. 2761 by $34,000,000, based on 1996 billing determinants. These tariffs
shall be effective for all bills rendered on and after July 30, 1999. If a final
order approving this Stipulation is entered after June 30, 1999 and as a result
PNM is unable to implement the rate reduction agreed to herein by July 30, 1999,
the rate reduction will nevertheless be effective for all bills rendered on and
after July 30, 1999. PNM will implement the rate reduction with the first full
monthly billing cycle which begins 30 days after entry of a final order
approving this Stipulation and shall refund or credit to customers any excess
revenues collected as a result of the delay in implementation past July 30,
1999.
8. To comply with ss. 18 of the Electric Utility Industry Restructuring
Act of 1999, Laws of 1999, ch. 294 ("the Act"), PNM shall also file a second set
of new tariffs which shall reduce New Mexico jurisdictional 1996 test period
annualized revenues by an additional $7,409,457 to reflect that local government
franchise fees ("franchise fees") currently charged by government authorities
shall be collected from and stated as a separate line item on the bills of
customers located within the jurisdiction of the government authority imposing
the fee. This second set of tariffs will replace the tariffs described in P. 7
once PNM's customer billing system (Banner) has been modified to reflect
franchise fees as a separate line item on customers' bills. PNM will use best
efforts in good faith to implement this second set of tariffs as soon as
possible, with franchise fees as a separate line item charged only to customers
located within the jurisdiction of the government authority imposing the fee.
But in any event, PNM will comply with all Commission orders applicable to
franchise fees. Notwithstanding the foregoing language, the signatories to this
Stipulation expressly reserve all rights and remedies they may have under
Section 18A of the Act.
3
9. The annual base rate revenue reductions set forth in paragraphs 7
and 8 will be allocated among current rate classes pro rata on a revenue basis
as shown in Attachments A and B, respectively to this Stipulation. Specific
tariffs reflected in Attachments C and D, respectively, to this Stipulation show
how the resulting $470,903,847 or $463,494,390 of revenues will be collected.
10. The Experimental Incremental Interruptible Power Rate ("EIIPR")
will be continued on a non-experimental basis for customers on that rate as of
the date of the execution of this Stipulation, will not be offered to new
customers, and will be called the Incremental Interruptible Power Rate ("IIPR").
The rates on the IIPR and on the economic development rate riders will not be
reduced.
11. The signatories agree that Tariff 16, PNM's Special Changes tariff,
should be approved as part of this Stipulation. Tariff 16 is included in
Attachments C and D to the Stipulation.
RATE STABILITY
--------------
12. Except as otherwise provided in this Stipulation, the rates
stipulated to herein and PNM's Street and Private Area Lighting rates shall
continue in effect, regardless of any changed circumstances, until customer
choice service is implemented in accordance with ss. 4 of the Act or January 1,
2003, whichever occurs first.
13. Under Section 4(A)(1) of the Act customer choice service is to be
implemented for public post-secondary educational institutions and public
schools, residential and small business customers before all other customers.
Therefore, the rates for each customer class stipulated to herein will remain in
effect until customer choice service is implemented for that class even though
customer choice service may have been previously implemented for another class.
4
14. The signatories will not institute on their own motion or encourage
or support another person to seek or initiate any proceeding requesting a change
in PNM's rates which would take effect prior to implementation of customer
choice service under the Act. If at any time after approval of this Stipulation
any person petitions or otherwise seeks from the Commission a rate case or other
proceeding or the Commission initiates a rate case or other proceeding to review
the reasonableness of PNM's revenue requirements and to seek a change in rates
that would become effective prior to implementation of customer choice service
under the Act, the signatories will state their support for the provisions of
this Stipulation and the continuation of the rates stipulated herein. The
signatories will support, and work in good faith and to the best of their
abilities to meet, the timeframes established in Section 4(A) of the Act for
implementation of customer choice service and will not institute or support any
delay in these timeframes unless necessary to maintain adequate and reliable
service to customers. This does not preclude the signatories from requesting
extensions of time, continuances or other appropriate relief from hearing
schedules or other deadlines in PRC proceedings initiated pursuant to the Act.
15. Except as otherwise provided in this Stipulation, before the
effective date of customer choice service, the signatories may make filings,
subject to Commission approval, that modify tariffs, riders and terms and
conditions of rate schedules or which propose new tariffs, riders or terms and
conditions, so long as such changes or additions do not increase or decrease
base rates reflected in the rate schedules implemented pursuant to this
Stipulation or increase or decrease revenues to PNM based on 1996 billing
determinants. However, this Stipulation shall not preclude PNM from proposing
decreases in rates or revenues.
5
16. Notwithstanding any provision herein to the contrary, before the
effective date of customer choice service, the signatories may make filings,
subject to Commission approval, that modify or propose new tariffs, riders and
terms and conditions of rate schedules if any governmental authority imposes (a)
a new franchise fee or a change in an existing franchise fee or (b) the Case No.
2787 renewable energy surcharge. In addition, PNM may seek approval of tariffs
to recover from governmental authorities increased costs of a siting, permitting
or construction requirement that mandates the extraordinary undergrounding of
distribution facilities not recovered under PNM's line extension policy or the
undergrounding of transmission facilities; provided however, a requirement
mandating undergrounding necessary to comply with state or federal rules,
regulations or laws shall not be included in such request to recover increased
costs from governmental authorities. The signatories will not oppose a request
by PNM for a Commission hearing or rulemaking on the recovery from governmental
authorities of increased costs of the extraordinary undergrounding of
distribution facilities not recovered under PNM's line extension policy or the
undergrounding of transmission facilities required by such authorities.
17. Nothing herein shall affect the operation of NMPUC Rule 330 or
PNM's Tax Adjustment Clause or PNM's Palo Verde Refinancing Credit approved in
Case No. 2837 which is stated as a separate line item on customers' bills.
18. The signatories acknowledge that this agreement to reduce rates
constitutes valuable consideration which the signatories have given based on
their expectation that base rates will not be changed until customer choice
service is implemented or January 1, 2003, whichever occurs first. The
signatories further acknowledge that they have agreed to the rate reduction in
reliance on and in exchange for the other signatories' promise that they will
not support docketing any proceeding to review the reasonableness of PNM's
rates, to seek a change in rates prior to implementation of customer choice
service, or support a delay in the implementation of customer choice service
beyond the dates set forth in Section 4(A) of the Act, except as otherwise
provided in this Stipulation.
6
GENERAL PROVISIONS
------------------
19. The signatories will use their best efforts to obtain expeditious
implementation of this Stipulation by the entry of an appropriate final
Commission order. This Stipulation assumes the legality and enforceability of
the rates and agreements set forth in this Stipulation. Should any rate or
agreement set forth in this Stipulation be rejected, modified or directly or
indirectly rendered inoperable by Commission or Court decision, any party shall
have the right, by filing a notice of withdrawal with the PRC within five
working days, to withdraw from this Stipulation and render this Stipulation of
no further force and effect, in which case the signatories shall attempt in good
faith to negotiate an appropriate substitute rate or agreement.
20. Under Commission Rule 531 adopted by the PUC in Case No. 2816, PNM
is required, for informational purposes, to functionalize the rates which
implement the revenue reduction agreed to herein. The signatories agree that
neither the methodology used to functionalize PNM's rates nor the resulting
functionalized rates after the rate reduction to comply with Commission Rule
531, shall in any way bind the signatories, constitute an admission or have any
precedential effect in any proceeding, including, specifically, any proceedings
and determinations required under the Act.
7
21. The rate design, rate design method, the allocation of revenue
requirements and the allocation method for setting revenue requirements agreed
to in this Stipulation reflect various compromises of the positions of the
signatories in this case for settlement purposes only and shall not constitute
an admission of any kind or otherwise bind any signatory or establish any
precedent or presumption in any other proceeding, including any proceedings
required by the Act.
22. This Stipulation shall not prejudice, bind, or affect any party, or
be viewed as an admission, except to the extent necessary to give effect to or
enforce the terms of this Stipulation or unless otherwise specifically stated
herein. In the event this Stipulation is not approved by the Commission, nothing
in this Stipulation or negotiations leading up to its execution shall be
construed as an admission of a signatory's position on any issue nor be used or
offered into evidence by any signatory in this or any other proceeding.
23. Neither this Stipulation nor changes or deletions in the proposed
4000B tariff to the section entitled, "Service With A Contract Demand of 10,000
KW Or More:" shall prejudice, bind, or serve as an admission by any signatory
regarding the historic application/availability of PNM's current tariffs to
specific customers or regarding the provision of electric
generation/transmission to the United States Executive Agencies facilities by
the Western Area Power Administration.
24. In its transition plan filed pursuant to the Act, PNM agrees to
propose methods to address the situation of customers which, after open access
pursuant to the Act, may not have genuine access to markets and suppliers beyond
PNM's system, and as such could be exposed to excessive market power of a
competitive power supplier.
8
25. This Stipulation shall remain in effect until terminated or
modified by unanimous consent of the signatories, except as otherwise provided
in this Stipulation.
26. This Stipulation expresses the full intent, understanding and
entire agreement of the signatories concerning the subject matter hereof.
27. This Stipulation shall be binding upon and inure to the benefit of
the heirs, successors and assigns of the signatories.
28. Approval of this Stipulation shall be entered as the Final Order in
Case No. 2761.
29. Other signatories may agree to the terms of this Stipulation
through the execution of a separate signature page. Duly authorized
representatives of the signatories have signed or telephonically
approved this Stipulation as of the 21st day of May, 1999.
/s/ Sarah D. Smith
- -----------------------------
Sarah D. Smith, Esq. for
Public Service Company of New Mexico
Alvarado Square, MS - 0806
Albuquerque, NM 87158
/s/ Karen L. Fisher
- -----------------------------
Karen L. Fisher, Esq. for
Attorney General of the State of New Mexico
Post Office Box 1508
Santa Fe, NM 87504
/s/ Steven S. Michel
- -----------------------------
Steven S. Michel, Esq. for
NMIEC
320 Galisteo Street, Suite 301
Santa Fe, NM 87501
9
/s/ Steve Hattenbach
- -----------------------------
Steve Hattenbach, Esq. for
NMPRC Staff, Utility Division
Marian Hall, 224 East Palace Avenue
Santa Fe, NM 87501
/s/ Nann Houliston
- -----------------------------
Nann Houliston, Esq. for
City of Albuquerque
Post Office Box 2248
Albuquerque, NM 87103
/s/ Bruce C. Throne
- -----------------------------
Bruce C. Throne, Esq. for
The Regents of the University of New Mexico
Post Office Box 9270
Santa Fe, NM 87504-9270
/s/ Leslie J. Lawner
- -----------------------------
Leslie J. Lawner, Esq. for
Enron Capital & Trade Resources Corp.
712 North Lea
Roswell, NM 88201
10